Gaza doesn't need aid: it has a £2bn gas field

Tim Butcher, Telegraph.co.uk., 7.11.07. Instead of checking into their smart Parisian hotels, donors would do better to come to Gaza to help free a Palestinian economic asset so large that it would do away with the need to bleed the international community of millions in aid every year. Twenty miles from the beaches of Gaza, too far for the eye to see but still very much in Palestinian waters, lies a fortune in untapped, off-shore gas. Prospecting vessels sent down two probes seven years ago and what they found got the juices of executives from multinational fuel companies flowing. In one field alone, experts estimated a reserve of £2 billion worth of natural gas. And there is plenty of potential for other fields. So complete is Israel's control of the vestigial Palestinian state that, for years, the Jewish state was able to block development of the field. Back then, the plan was for the Gaza gas to be sold to Egypt, but this was during the second intifada, when the prime minister, Ariel Sharon, said there was no way he would allow a project to grow that would earn money for Yasser Arafat.

Instead of Egypt buying Gaza's gas in the future, it suddenly began to make sense for Israel to become the purchaser: Israel's indigenous gas fields - north of the Gaza Marine field - could run out within a few years and the only other long-term source will be a pipeline from neighbouring Egypt. At first sight, this appears a win-win situation. The Palestinians would have a guaranteed purchaser for their gas, one that would generate £50 million a year for 15 years in tax revenues, and provide the foundation for sustainable economic growth. And the Israelis would have a secure source of affordable gas to underwrite their economy's growth. It would also neatly show how two historic enemies could come to rely on each other for economic prosperity. A negotiating team, led by Nigel Shaw from British Gas, the company that bought the rights to develop Gaza Marine, duly moved into an office block in a smart Israeli coastal town and prepared to draw up the various legal documents and guarantees that are standard in the international gas and oil industry. But in spite of public statements from Ehud Olmert, the Israeli prime minister, that he supports the project, and even the intervention of Gordon Brown, then Chancellor of the Exchequer, who identified the deal as key to the development of the Palestinian economy, negotiations have not budged. Approaches made by The Daily Telegraph to key Israeli government stakeholders - the National Infrastructure ministry and Prime Minister's Office - have resulted in similar statements about "negotiations progressing" and "final agreements being imminent", but industry insiders have revealed that, in reality, no agreement is in sight. There were some Israeli concerns that the gas money might end up in the hands of Hamas, but they were dealt with last year, when a trust fund was set up that ensured international cash goes only to the Palestinian government appointed by Mahmoud Abbas, president of the Palestinian national authority and leader of Fatah.

If Mr Blair is serious about his mission to help develop a sustainable Palestinian economy, he could put his weight behind getting the Gaza gas project off the ground. So far, he has set his sights a bit lower, talking publicly only about redeveloping a sewage plant in Gaza and cautiously dodging attempts to involve him with Gaza Marine. Unless he shows a bit more courage, one fears next month's donor conference for the Palestinians will not be the last.